Chancellor Rachel Reeves is considering a shake-up of council tax in England that could see owners of expensive homes paying thousands more, according to reports. Options include doubling council tax on properties in bands G and H, or revaluing the top three bands and applying a surcharge to the 300,000 most valuable homes. The move is part of a package of smaller tax-raising measures after the government abandoned plans to increase income tax.
The current council tax system, based on 1991 property values, has been widely criticised as outdated and inequitable. The Resolution Foundation described it as a “dog’s dinner”, while the Institute for Public Policy Research called it “outdated and regressive”. Properties in London’s wealthy Kensington pay less council tax than those in Blackpool, highlighting the disparity. The average band D property in the north-east faces bills of £2,425, compared with £1,981 in Greater London.
Critics argue that the tax has become a turbocharger of inequality, as house prices have more than quadrupled since 1991. Stuart Hoddinott of the Institute for Government called it a “deeply broken system”, noting that rates vary widely between councils due to decades of incremental decisions. For example, two councils starting with identical band D rates in 2010 could now differ by over £600 depending on annual increases.
Any changes are expected to face opposition from Labour backbenchers whose constituencies would be hardest hit. The Financial Times reported that Reeves is under pressure to scale back her plans. Council tax is devolved, but changes in England could influence other nations.
